Supply chain | Supply Chain Management, Commerce

Converting standard cost item to average cost item for product substitutions

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Hello,

We have some items in our company that use standard cost (manufactured items) and others that use average cost (purchased items). Sometimes we need to use a manufactured (STD) item as a substitution for a purchased item (AVG) to fulfill customer orders.

Since the part that it is becoming is an average cost, purchased part, we cannot put a production order on to capture the labour and convert the manufactured, standard part into the purchased part.

Is there a way to convert these parts and capture the costs?

Thank you!

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BillurSamdancioglu 19,703 Most Valuable Professional on at

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Hi,

Have you considered to use batch or serial number?

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André Arnaud de Cal... 300,982 Super User 2025 Season 2 on at

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Hi,

Can you explain your envisioned process for using another product as a substitution in case you can't deliver the original ordered item? Are you changing the order or do you want to post an inventory journal to subtract the manufactured items and increase the on-hand for the purchased item?

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Community member 6 on at

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Hi Andre,

We are currently subtracting the manufactured items from inventory and adding to the purchased item. The concern with that is that the costs between the two are different, so finance is seeing a variance, and that method does not capture the labour involved in repackaging the manufactured item to use as the purchased item.

Ideally we would love to have a production order that could be scheduled, capture the labour, consume the manufactured item as a BOM component, and report as finished to increase the inventory of the purchased item. That's where we get stuck because I don't see a way to add a BOM to a purchased item, so we are looking for other methods that could capture those costs and make a clear trail for finance.

Thanks!

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Guy Terry 28,924 Moderator on at

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You could create a new BOM item, which is average costed. This being the item you sell when the purchased item is not available.

You could create a production order to produce the new BOM item, which will capture cost of repackaging the standard cost item, and also consume the standard cost item (and could consume any packaging items as appropriate).

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Nigel J Cox 40 on at

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I hope I am understanding your issue correctly! Have you considered making the Item a BOM item (and providing a BOM and Routing) BUT selecting Purchased on the default order settings? This would plan for Purchasing in MPS but permit you to manufacture, I believe. I haven't tested whether the system will let you update a Released product to type BOM, but I suspect it will . . .

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